Guest Post: By India Avenue
"When you bring a new capability like Aadhaar, it takes time for people to understand what it does and how it can be used. There is certain diffusion time, we are in that phase, I am very confident in the coming year, Aadhaar based companies and application will be numerous. It will become a big platform of innovation." - Nandan Nilekani, Co-founder of Infosys Technologies and Ex-chairman of UIDAI.
What is Aadhaar?
Aadhaar, a significant structural reform initiated by the previous UPA government and fast tracked by the Modi led NDA government, has enabled electronic identification and authentication of any person resident in India and registered with the Aadhar platform. Aadhaar is a unique identification number issued by the Unique Identification Authority of India (UIDAI) that provides a strong authentication of a resident using biometrics / IRIS scan (‘who you are’) combined with one-time password sent to the mobile phone (‘what you have’). By 31 December 2016, the UIDAI has generated 1.09 billion (~89% of population) Aadhaar numbers and authenticated 4.06 billion transactions using the Aadhaar platform.
The objective of issuing Aadhaar numbers was to eliminate duplicate and fake identities and enable the government to efficiently deliver social welfare services through direct benefit transfer (DBT).
Benefits of introducing Aadhaar:
A recent economic survey highlighted that India’s public distribution system (PDS) for wheat, rice and kerosene had leakages of 54%, 15% and 41% respectively. The leakages are mainly due to lack of easy identification and verification of beneficiaries, the dependence on bureaucratic discretion to identify beneficiaries, and the involvement of too many middlemen in the delivery of the benefits. These has led to the inclusion of ineligible and exclusion of the eligible from welfare schemes. The Government spends about A$70 bn in various social welfare programmes in India. Direct transfer of these benefits will:
- likely curtail the annual spend by A$13-15 bn, as leakages in the system will reduce substantially.
- augment the effectiveness of welfare schemes, reaching the intended recipient directly.
- curtail the opportunities for leakage by reducing the number of government departments involved in the distribution process.
- weed out duplicate beneficiaries.
Beyond standard monetary transactions, Aadhaar can be used
- as an identification tool for availing government and private services.
- for doing e-KYC for buying financial products and availing pre-paid mobile sim cards.
